The Pension Benefit Guaranty Corporation (PBGC) has issued a final rule on interest rate assumptions affecting benefits payable in terminated single-employer plans and allocation of assets in single-employer plans. The rule is effective July 1, 2017.

The rule prescribes interest assumptions under the benefit payments regulation for valuation dates in July 2017 and interest assumptions under the asset allocation regulation for valuation dates in the third quarter (July through September) of 2017. The interest assumptions are used for valuing and paying benefits under terminating single-employer plans covered by the pension insurance system the PBGC administers.

The interest assumptions are intended to reflect current conditions in the financial and annuity markets. This final rule updates the benefit payments interest assumptions for July 2017 and updates the asset allocation interest assumptions for the third quarter of 2017.

The third quarter 2017 interest assumptions under the allocation regulation will be 2.44% for the first 20 years following the valuation date and 2.74% thereafter. These interest assumptions are almost unchanged from those for the second quarter of 2017.

The July 2017 interest assumptions under the benefit payments regulation will be 1% for the period during which a benefit is in pay status and 4% during any years preceding the benefit’s placement in pay status. These rates are the same as those in effect for June 2017.

About ASPPA

The American Society of Pension Professionals & Actuaries is a non-profit professional society.
The materials contained herein are intended for instruction only and are not a substitute for professional advice.
Copyright 2017 by ASPPA